Best No-Effort Investments?
 

For those who will hammer me on learning the ins-and-outs of investing, let me start with this. I'm a 22 year old in grad school (Computer Science), and I just got married. Therefore, I don't have the time to sit down and get messy with stocks/etc.

My question is mainly this: My wife and I have agreed to put $50-$100 per month into an account on the side. We were wondering what type of account would be best to put this money in, and get the best investment.

Traditional savings accounts are terrible. No benefit in that. CDs are meh. I was thinking that mutual funds/Roth IRAs are the way to go. With a Roth, I could take the money out at >5 years in the case of an emergency, yet still get ~4-5% interest/yr. Is there anything I'm missing? Suggestions? Alternative options?

Thanks in advance :)

Employer matched 401k if applicable, otherwise a roth account in a low fee (vanguard) plan where you split it 33/33/34% across whole market stock, whole market bond, and total international.

Simple, one account, three funds, automated and has beaten 90+% of all investments across every 10 year period.

Thanks for the insight-- Though I'm in grad school, I'm currently employed temporarily by the school doing research assistance... therefore no 401k yet. I do have a question though: doing the 33/33/34%, Vanguard can set this up automatically? Also, what range of ROI can I expect?

Nothing besides a Bank Account/CD is guaranteed. So unless you're willing to take a 1% return, theres a chance you could actually lose money with whatever advice you decide to take from people around here.

I understand there's always a risk-- I'm ok with going into a low risk, or even a medium risk account.

Before you do any investing, first answer the question, do I have enough saved up to live for at LEAST 6 months. If you do not have this emergency savings fund, then do NOT invest a penny until you do.

Yes-- I have saved for 15 months expenses, fully paid off my student loans, and have 0 credit card debt. Now I'm just looking to set aside extra savings into a high interest account of some sort.

If you really want to "set it and forget it" I would put it in a roth in a targeted life cycle fund. These gradually become more conservative over time so as to reduce the risk of losing a lot when you're close to retirement

I assume your income is low, so if you are investing for retirement, the open a Roth IRA with Vanguard. Chose a life fund, which will diversify for you based upon your expected retirement date.

Once you start making more money and have career jobs, your employer will probably provide a match for their 401K. Take full advantage of the match. Again, Roth until your income is high and then switch to a non roth account.

keep it simple, add on a regular time frame and in 10 years you'll be surprised on how much is in the account.

yeah, the question is what is this account for? If you're saving for retirement (great to start early), don't even think about taking it out in 5 years. If you're saving for a home down payment within 5 years from now, don't look into the IRA funds. look into a few mutual funds.

One other thing, you ARE young, and you have a lot more room for the up and downs... while i understand you don't want to make this a second job, tracking stocks, look into some higher risk mutual funds.

I keep reading about mutual fund recommendations. Why not ETFs? Aren't ETF's the go-to choice nowadays, with such lesser fees?

It depends upon the goal/use of the funds while saving. If any interest/gains earned are intended for retirement then opening a Roth IRA would be a good way to go for the qualified tax status. The five year aging referenced a few times in this thread are illustrated incorrectly; with a Roth IRA you can take your contributions out at anytime penalty/tax free. By doing this you will have started saving for retirement and if your plans change with the house you would have already been putting the assets to work, and if your plans do not change then you'll have the full amount invested (assuming no loss) available to take out and use as a down payment.

i am sorry to disappoint you but there is no "no effort" investment. Free cheese is only in the mouse trap.

i think savings accounts are pretty "no effort." You don't even have to go to the bank anymore. Just click a mouse.

i bonds are at something like 1.76%...i dont think any of the 5 yr cds beat that. kinda crappy but its set it and forget it.

At what point did I say 'no effort'?

Thanks for all the input everyone. I decided to go with a Roth IRA life cycle fund. Pretty good returns (~5-7% in the past 5 years, ~6% past 10), and it's easy to set up auto deposits from my banking accounts. I set it up with Vanguard, they have awesome customer service!

Great job on deciding on the life cycle fund, however, DO NOT choose the fund based on its past performance. Past performance does not guarantee future performance. I believe you should decide your risk tolerance and choose the appropriate matching fund.

Let me put it to you this way. You are young and have time to learn the stock market. If you are smart and good with numbers, you can't afford NOT to spend time learning the stock market. Why don't you put in a little effort to make your money work for you, and you can retire earlier or with a better standard of living? A little investment in time now can pay off many times over in the long run.

Find a new new dentist office/practice and loan them a few grand for marketing but ask for a certain return back on your money. Pretty no-effort way to get a good return.

OP, I'd suggest buying silver coins. They're about $34/ea right now.

You have no choice but to spend some time studying personal finance so you won't make really bad decisions or hold wrong assumptions. You won't choose the very best investments, and it's a waste of time to try. Choose reasonably good investments -- no sales commissions, low overhead costs (expense ratios), that let you cash out any time (no contracts or redemption fees). Investing in a bit of everything isn't a bad way to go, and you can do that with target mutual funds or fixed allocation funds (balanced funds like Wellesley Income or Wellington, or Fidelity's 4-in-1).
Don't assume that, because 0.7% APR in a savings account is still better than 0.0% for cash stuffed under the mattress, and safer.
You'd better check the track record of such investments because the stock market lost half its value from about mid 2007 to early 2009. OTOH it's almost doubled since then. Of course you'll always know exactly when to sell high and buy low, right? :D Check the volatility (standard deviation) of various investments, and don't rely only on the graphs that show what $10,000 has grown to but also the graphs showing annual gains and losses.

Actually with Roth IRAs you can take out your contributions at any time, without tax or penalty. Only withdrawls of profits before age 59.5 are taxed.

Read the John Bogle and Burton Malkiel books. Ignore CNBC. Watch http://www.WealthTrack.com online or on PBS.

Past returns are no reason to assume a fund is good or bad. You really have to be careful here because some funds advertise being #1, but reached that position only by taking big risks or betting on one particular sector that did unusually well. Look at one of the hottest fund families of the 1990s, Janus: It ran a balanced fund (typically a mix of bonds and conservative stocks) that was #1 among balanced funds only because it bought a lot of risky tech stocks, and its bond portfolio was actually just average.

Wherer would you suggest I can learn abouts stocks. I've been flirting with the idea, but I think its time I take some action.

Check out the bogleheads wiki
http://www.bogleheads.org/wiki/Main_Page

And the Bogleheads Guide to Investing is a very good read
http://www.amazon.com/Bogleheads-...+investing

Your local library probably has the bogleheads books available to check out.

The bogleheads style matches what you're looking to do.

The two Peter Lynch books, One Up On Wall Street and Beating The Street, might be a good starting point. That's not to say you'll actually beat the street (i.e., do better than index funds) by following his advice, but Lynch is one of few money book authors (actually co-author, with John Rothchild) who's actually done it, unlike the vast majority of others, all who are less modest than Lynch.

The most highly recommended books about investing are by Warren Buffet's mentor, Benjamin Graham: The Intelligent Investor and Security Analysis.

Another highly recommended book is How To Make Money In Stocks, by William O'Neil, which describes CANSLIM, his method of investing. But keep in mind that O'Neil (publisher of the Investors Business Daily newspaper, ran two mutual funds, the O'Neil Fund, which was liquidated in the late 1970s (not due to overwhelming success), and the New USA fund, another underperformer that was taken over by another fund. The New USA fund was run according to the principles taught in How To Make Money In Stocks. And I'm not saying O'Neil touts his CANSLIM system to get people to buy his Daily Graphs information service, not at all.

Winning The Loser's Game, by Charles Ellis is about investing but is loosely based on a book about golf that said unskilled golfers shouldn't try to play like pros. IOW don't try fancy, difficult stuff, and stick to the easier stuff.

Everybody knows someone who lost a job or a huge chunk of their retirement savings. Most people are just holding on to huge savings accounts that blow your mind at 1.0% interest.Everyone is afraid of the stock market.But by phone call and reading news paper is sufficient to earn money here we don't see any
effort.

I'll tell everyone here what I tell everyone in every other investing-related thread - MOST people do worse than the market by trying to pick their own stocks. Some do better, but this is NOT in any way related to knowledge. The people consistently beating the market are not beating the market because they spent more time reading investment books and learning about various industries, it's because they have good intuition about how a sector will do in the future, or whether a stock is likely to go up or down throughout the day (if they're a day trader).

So what should you, the 'average' investor do? Index funds. Index funds attempt to 'track' the market, meaning that in general an index fund will do about as well as a particular market.

If you invest in an index fund, on average you will do better than people that pick their own stocks. Yes, you can read all you want about the stock market, and different industries, and investing strategies, and what all of the technical indicators mean.. but at the end of the day, knowledge really won't help you pick better stocks. Going with an index fund puts you ahead of the guessing game, and gives you a lot of diversity without the effort of trying to pick hundreds of individual stocks.

OP would be down 8% in 8 days if he would have bought at your suggestion.

Look up investor blogs and stock market message boards, learn from the real pros. Stay away from big name media such as cnbc and marketwatch, those are garbage. start with investopedia and stockcharts.com. Read everything you can, and follow the stock market daily.

Go to Vanguards site, they have a full spectrum of "investing Basics Articles." You should be able to read through the main ones in a night and then choose what is best for you. Ultimately, you will probably come to conclusion that a Target fund like others have suggested is pretty low maintenance and best suits your current life.

Ah yes, because a reasonable time horizon is less than 10 days.

Is investing in a shiny metal really a good idea? My understanding is that the only reason the price on precious metals has risen is because people are afraid to invest in anything else. I remember buying 1 ounce bars of silver for $6 in the late 90s. Adjusting for inflation, I don't see how they are really worth more than $10. It just seems like the price is just really inflated right now.

The long-term movements in the PM's are due to hoarding and arbitrage. In the short term, it's speculation in the futures market. It's not supply and demand; there's silver everywhere.

If you *think* they're only worth $10 and spot is $30 and you still have the metal, sell it for a nice profit and short the price. That's one hell of a trade if it works out.

FWIW, for gold to reach it's CPI-inflated price today to match it's peak in 1980, it would have to be around $2300. People never *believe* how high something can climb in price until it's at the unbelievable price. Same thing with stocks, bonds, the price of college tuition, whatever.

OP will be down his entire 401k and Roth IRA following everyone's suggestions, because Obama and liberals are now planning on dipping into American' Citizens 401k's and Roth IRA plans with fees, taxes, and just plain out stealing what you have in your accounts.

Use taxable accounts, make your own portfolio, less fees, more freedoms, more liquid assets, and you can retire much much earlier.

source?

A growing concern and question at

http://answers.yahoo.com/question...822AAH5qyU

But for evidence see

http://msplaceddemocrat.wordpress...junk-bond/

got anything newer than 4 years old?

asdfasdf

Never let your financial decisions be skewed by your political viewpoints, especially when they're wrong. Jeremy Siegel's book Stocks For The Long Run shows how investments have done under each political party. Basically, stocks have done better with Democrats in power, bonds better with Republicans.

You could have made a valid argument against pension accounts by pointing how how 401(k) withdrawls are taxed as ordinary income, while stocks and bonds in non-sheltered accounts are taxed at lower dividend and capital gains rates.

Agreeable, but when you are restricted to your own money especially for over 10-30 years of a time frame, red flags should be going up.

The MAJOR risk of stashing your cash into a 401k or Roth IRA is giving up your control and putting restrictions on what you can do with your own money especially at a younger age.

Roth IRA are less restricted because you can withdrawl principal amounts at will that are susceptable then to tax rates, yet you can't withdrawl gains from that principal amount until age 59.5.

So since the government is racking up massive debts and spending/wasting tax payer dollars without any authority to say no to them, one day they will push the edge of the economy, and request an "Emergency" Debt Payoff.

$17 Trillion sit in 401k and Roth IRA accounts, while $16 Trillion in National Debts + over $4 Trillion a year spending sprees....

Do you trust your government never to touch your 401k or Roth IRA gains account for money over the next 40 years? :mad:

Do you trust your government never to take your house away from eminent domain?

If your goal is to live off of your investment returns one day at a very young age, 401k and Roth IRA would be against your goal because of the age/ fees/ government control over institution restrictions that they can change at will over your "safe havens" accounts.

The government would take your life if need be, they think they own you.

Does that mean you're you against the death penalty?

I don't know what will happen in the future, but when has withdrawl of Roth IRA principal (contributions) been subject to taxation, unless you spend it on something that's subject to sales or property tax?

$17 in Roth and 401(k) accounts vs. $16T in federal debt are about as comparable as chewing food 32 times because a person has 32 teeth. Also look at the interest payments on that federal debt -- as a proportion of the GDP it's lower than it was in the 1980s through mid-1990s. As for the $4T annual federal budget, it's actually not mostly a spending spree.

Your type of thinking will probably cause you to make less than optimal investment decisions, sort of the way our leading bankers of the 1920s thought it was only prudent to keep the US dollar strong against the value of gold.

still waiting on a recent source...

I find this advise quite interesting, especially when the government will be dipping into 401k and Roth IRA plans in the future....


"Planning Ahead for the Unearned Income Medicare Contribution Tax
http://taxes.about.com/od/payroll...re-Tax.htm

The additional Medicare tax takes effect starting in the year 2013. Higher-income individuals will want to do some quick math to see how this tax will impact their finances. Some tax planning suggestions:

Shift income-producing investments into tax-deferred plans such as IRAs and 401(k) accounts.
Consider tax-exempt bonds instead of taxable bonds. (Suggested by Tony Nitti.)
Pair capital gains with capital losses so that net capital gains are as low as possible.
Defer selling investments with a capital gain to a year when the additional Medicare tax would not apply.
Give income-producing investments to children or other family members who aren't subject to the additional Medicare tax. (Suggested by Rick Bailine.)
Manage your modified adjusted gross income around the thresholds for the Unearned Income Medicare tax. (Suggested by Tony Nitti.)
Harvest investment gains, but not losses, prior to the end of 2012. (Suggested by Tony Nitti.)
Consider meeting the material participation test for income generated by an S corporation or partnership. (Suggested by Tony Nitti.)
Consider meeting the real estate professional test for income generated by rental properties. (Suggested by Tony Nitti.)
Increase payroll withholding or estimated taxes to cover the additional Medicare tax."

Some of this advice i would not follow, because they are trapping you into paying additional recurring Professional license fees and taxes, and will be dipping into your 401k accounts.

where is your source for the government dipping into 401k/ira accounts. still waiting on that.

Regime Moves Closer To Confiscating Retirement Accounts
22 February, 2013 by Whoopie
Be afraid, be very afraid…

On Nov. 20, 2007, Theresa Ghilarducci, professor of economic policy analysis at the New School for Social Research in New York, presented a paper proposing that the feds eliminate the tax deferral for private retirement accounts, confiscate the balance of those accounts, give each worker a $600 annual “contribution,” assess a mandatory savings tax on every worker and guarantee a 3 percent rate of return on the newly titled “Guaranteed Retirement Accounts,” or GRAs.

How would that be accomplished? The Carolina Journal reported Ghilarducci’s 2008 testimony to Nancy Pelosi’s House.

Democrats in the U.S. House have been conducting hearings on proposals to confiscate workers’ personal retirement accounts “including 401(k)s and IRAs” and convert them to accounts managed by the Social Security Administration.

Your Government universal GRA investment savings account is an annuity managed by Social Security. Hedgecock noted ‘[m]ake no mistake here: Obama is after your retirement money. The “annuities” will “invest” not in the familiar packages of bond and stock mutual funds but in the Treasury debt!’

By 2010 Bloomberg published an article titled “US Government Takes Two More Steps Toward Nationalization of Private Retirement Account Assets.” In that article Patrick Heller observed that, with Democrat control of Congress and the Presidency:

[I]n mid-September 2010 the Departments of Labor and Treasury held hearings on the next step toward achieving Ghilarducci’s goals. The stated purpose was to require all private plans to offer retirees an option to elect an annuity. The “behind-the-scenes” purpose for this step was to get people used to the idea that the retirement assets they had accumulated would no longer be part of their estate when they died.

So the Government would get the money, not the estate or family of the people who saved the money during a lifetime of work. That’s a one hundred percent death tax on savings. Worse, the most responsible and poorest families will be penalized.

Read more:

http://www.americanthinker.com/20...um=twitter

Just one bit of advice for the feds. Before you guys try this you better find a way to totally disarm the American public, oh yeah that's what they are doing now.

- See more at: http://blurbrain.com/regime-moves...dIPrl.dpuf